When China's Xinhua news agency published an adulatory report of a conference at the seaside resort of Beidaihe on August 5, [1] I was puzzled. Chinese Communist Party General Secretary Hu Jintao had banned these meetings as a waste of money and time - they were boondoggles. And China's media (at least the press that wasn't totally in the control of the Central Propaganda Department) praised President Hu's policy as a "populist measure in support of good government" (qinmin qinglian).

Now, it is true that Hu is in a weak position. He is heavily outnumbered in the Politburo of the party Central Committee by disciples of China's strongman, Central Military Commission chairman Jiang Zemin (who was also Hu's predecessor as president and party boss). But certainly Hu should be given due deference. He is, after all, the titular chief of the party and the government.

Hu Jintao's 'populist measure for good government'
Which is why I was bemused that there was a report of any kind of meeting at Beidaihe, a famous resort and annual leadership retreat on the Bohai Gulf, 280 kilometers east of Beijing. I recalled that as a result of Hu's proscription, most governmental and party organizations, central and political, had shied away from Beidaihe. Just to confirm my recollection, I went to the People's Daily Net (www.peopledaily.com.cn) and pasted "Cancel Beidaihe to handle affairs" (quxiao Beidaihe bangong) into the search engine. Sure enough, a string of stories from the summer of 2003 popped out. In September, for example, there was an entire issue of the China Economic Review [2] devoted to the hard times at Beidaihe due to the government vacation ban. The article's big question: "Would China's 'Summer Capital' become history?"

But as I read, the history of the cancellation of the Beidaihe meetings became a bit more complex than I remembered. In late June 2003, the first announcements of the cancellation of the meetings "for this summer" were linked to the epidemic of severe acute respiratory syndrome (SARS). By late July, news stories praising the permanent cessation of the Beidaihe sessions appeared on a number of websites - none of which was one directly responsible to the Central Propaganda Department. Three articles in particular, one in Procuratorial Daily [3], one in China Youth News [4] and another in Southern Metropolitan News, [5] were lavish in their praise of Hu's decision. Southern Metropolitan, for example, spoke of "President Hu Jintao's commitment to the people", that "power is to be used for the people, our passion is given to the people, benefit is sought for the people", and it described Hu's political ally, Premier Wen Jiabao, as "the premier of the common man" who "deeply understands what the people expect".

In addition to this were interminable message posts from private citizens on the People's Daily website extolling Messrs Hu and Wen. One random example [6] said "everyone knows that the very first official act that Hu Jintao, the new secretary general of the Chinese Communist Center, did upon his promotion was not 'to hold a meeting', it was not 'to research', but rather to go directly to the old revolutionary base area of Xibopo for a discreet tour in an effort to see for himself the hardships of 'his peasant brothers'". This lengthy post went on to blast away at "privileges, corruption, wealth, influence" of party officials at the local level, and became uncomfortably unctuous and obsequious.

But there it was, and I have no doubt that the writer genuinely felt these things about China's two moderate leaders. Both President Hu and Premier Wen had become heroes of Beijing's anti-SARS campaign in 2003, while Jiang and his coterie decamped to the relative safety of Shanghai.

One of the most recent Beidaihe posts on People's Daily site was one dated July 30, 2004, under the title "Hu Jintao Stresses: Deeply Understand the Special Points and Discipline of Economic Development". Almost like an imperial memorial, the anonymous post addressed Hu, saying, "from Xibopo to fighting SARS, from reforming the official junket system to canceling the Beidaihe vacation meetings, we see that self-same work style of the older generation of proletarian revolutionaries ... General Secretary, the people support you!"

Zeng Qinghong goes to Beidaihe anyway
The people may support General Secretary Hu's work style, but his main rival apparently doesn't. And for those of you who don't regularly divine the cracks in bovine scapulae or tortoise plastrons gently toasted over a Beijing hearth, let me add that Hu's main rival is his nominal deputy, Vice President Zeng Qinghong. Zeng is capo de capo of military commission chairman Jiang's "Shanghai Gang", aka "Shanghai bang" - the irreverent name for the battalion of top functionaries in the Chinese Communist Party, army and government structure who worked with Ziang Zemin in the 1980s when he was Shanghai's mayor and party boss.

Seemingly in defiance of President Hu's instructions, Vice President Zeng cheerfully presided over a conference of his Shanghai co-factionalists at Beidaihe resort on August 5. The conference was billed as a "symposium" to express support for "highly talented personnel" from the western and northeastern provinces "who were vacationing in Beidaihe" (this despite Chinese media reports that government-funded vacation boondoggles in Beidaihe would be cut back drastically last year).

For a "Who's Who" of the so-called "Shanghai Faction" in China's leadership, one only need gaze at the list of attendees at a conference convened in Beidaihe on August 5 by Vice President Zeng, who is also the fifth-ranking member of the Communist Party Politburo's Standing Committee. The only Shanghai people missing were Politburo members who outranked Zeng - no doubt they deferred to the vice president as it was to be Zeng's show. But most of other the top factionalists were there. Minister of Personnel He Guoqiang convened the meeting, and apparently restricted the invitation list to political allies of Jiang and Zeng. In order of rank, they included former Shanghai party chieftain Huang Ju, who is now the senior vice premier of the State Council, as well as Vice Premier Zeng Peiyan; State Councilor Madame Chen Zhili and State Council secretary general Hua Jianmin; and General Xu Caihou, chief political commissar of the People's Liberation Army (PLA) represented the military. Wang Gang, director of the party's Central Office, was a featured guest because of his key role in party personnel decisions. (Minister of Public Security Zhou Yongkang, although he wasn't listed, was probably in attendance as well.)

The fact that Jiang-Zeng factionalists dominate the day-to-day work of the party, the State Council and the military was never so clear as it was when Hua, Wang and General Xu appeared at Beidaihe on August 5 at Vice President Zeng's instruction.

Shanghai dominates leadership politics. At least five of the nine Politburo Standing Committee members are tattooed blood-brother Shanghai clique-ists. These five can count on the nominal "Politics and Law" chieftain Luo Gan for a vote if they really need it. President Hu, meanwhile, is left with Premier Wen and possibly discipline-inspection czar Wu Guanzheng in his intramural battles. In the Politburo, the influence of the Shanghai faction is even more pronounced, especially in the military and the Foreign Affairs, State and Public Security ministries. In the State Council, the vast majority of ministers are identifiable Jiang loyalists.

How high are the stakes?
The outcome of the power struggle in Beijing does make a difference in the rest of Asia, and indeed the world. President Hu and Premier Wen clearly are moderates on national-security policy if their apparent equanimity in the face of Hong Kong's "Article 23" anti-sedition fiasco last summer is any indication. Hong Kong press reports indicated that Hu-Wen faction people tried to convey to visiting Hong Kong politicians that the center in Beijing did not have any opinion on the timing or content of the legislation, while the Jiang-dominated Propaganda Ministry and the directly controlled state media demanded that the legislation be passed "one time and as written". The signals were so mixed that Vice President Zeng was forced out of the shadows to appear as the eminence grise of the hardline Hong Kong policy.

No doubt these factional differences resonate in the way Beijing handles the disputes with Japan over its East China Sea claims, with Korea over whether the ancient kingdom of Koguryo was Chinese or Korean - and hence whether its ancient territories are historically one or the other. And, of course, how the two factions would deal with Taiwan is a function of the priority their relative leaders' place on "economic development" or "territorial integrity and sovereignty".

Jiang and Zeng see control and influence over the PLA as essential to holding power. Consequently, it is essential for Jiang, chairman of the Central Military Commission, to shower the PLA with lavish rewards - this means the army must be given top priority in China's economic structure for investment, recruitment and pay. And this is exactly what Jiang has done. Chairman Jiang has given the PLA's General Logistics Department orders to draft a research report emphasizing the priority status on military pay and benefits in an effort to attract young, talented recruits to the defense establishment.

Jiang expects to maintain his iron grip on the military by presenting these new national-security requirements at the Fourth Plenum of the 16th Central Committee next month. (The date has not yet been announced.) Ingratiating himself with the military leadership with general officer promotions to his loyalists and planning for a major increase in troop salaries to ensure the allegiance of the ranks are his obvious tactics.

Identifying "the defense of China's territorial integrity" - and not economic development - as the overriding mission of the party is a dangerous policy choice that Jiang and his Shanghai faction have adopted solely to bolster their grip on power. If they were in charge, President Hu and Premier Wen could not possibly be any more hardline, and more likely would pursue more moderate policies toward Taiwan and China's other neighbors.

But as long as the rest of the world's leaders show fear, anxiety and alarm at the hardline Jiang-Zeng policies, and as long as the Jiang-Zeng hard line draws no backlash, the hard line will prevail. It is ironic, then, that if the US administration of President George W Bush wants to moderate China's bellicose rhetoric, it should announce the approval of Aegis destroyers for Taiwan and explicitly link the approval to China's inexorable five-year military buildup against the island. And ironically, moderation from Beijing would have far greater chances of success with Beijing's increasingly suspicious and alarmed Taiwan compatriots than unbending hostility.

Footnotes

1) Xinhua, August 5, 2004.
2) China Economic Review, September 2003.
3) Procuratorial Daily; see also here. 
4) China Youth News.
5) Southern Metropolitan News. 
6) People's Daily post example.
7) People's Daily post, July 30, Hu Jintao Stresses: Deeply Understand the Special Points and Discipline of Economic Development. 

John J. Tkacik is a research fellow in Asian Studies at the Heritage Foundation in Washington, DC. He is a retired officer in the US Foreign Service who served in Taipei, Beijing, Hong Kong and Guangzhou and was chief of the China Division in the State Department's Bureau of Intelligence and Research.